Behind the Surplus: $172M in “One-Time Revenue”January 23, 2017
Connecticut reported a slight surplus last week, but at least one Republican argues it relies on "one-time revenue" that doesn't abate the budget crisis.
On Friday, the budget director for Gov. Dan Malloy (D-Conn.) reported Connecticut is on pace to be in the black for fiscal year 2017:
In a letter released Friday to the State Comptroller, Ben Barnes credited “strong collections over the past few months” from the corporation tax for the projected $23.3 million surplus in the general fund, the state’s main spending account.
At least one Republican, though – Senate Republican President Len Fasano (R-North Haven) – is warning the surplus relies on “one-time revenue“:
[Fasano:] “This is a result of $172 million in one-time revenue. This should underscore the fact that we have to be exceptionally cautious when it comes to creating a sustainable budget as we prepare to tackle even greater challenges in the next fiscal year.”
The $172 million in one-time revenue Fasano includes the $31.5 million from Moody’s Investor Services and the $120 million Connecticut received in October 2016 from RBS Securities. Both settlements were related to the handling of mortgage-backed securities which directly contributed to the 2008 financial crisis.
There is a recent history of one-time revenue providing brief windfalls for Connecticut’s budget, before greater crises emerge.
Former Gov. Jodi Rell’s (R-Conn.) last budget, in 2010, relied on $2.7 billion in one-time revenue that some warned would force Connecticut “to raise taxes in 2011.” (Gov. Malloy did raise taxes in 2011, by several billion dollars.)
In 2013, Connecticut ran a surplus that Comptroller Kevin Lembo (D-Conn.) attributed to “one-time revenue windfalls.” (Gov. Malloy and Democratic legislators decided to raise taxes again in 2015, by several billion dollars.)
Will Malloy and Democrats propose raising taxes in 2017? We’ll have to wait for Malloy’s budget (in February) and the legislative session this spring to find out.
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